NQ Mobile Inc (NQ) Dismisses PwC As Auditor

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This is interesting development in the new NQ Mobile Inc (NYSE:NQ) and Muddy Waters….. The internet service provider has been under pressure since Muddy Waters called into account some of the firm’s accounting. Now, the firm is announcing a change of auditors, see the information from the press release below. We will follow up later with more analysis.

BEIJING AND DALLASJuly 18, 2014 /PRNewswire/ — NQ Mobile (NYSE: NQ), a leading global provider of mobile Internet services, today announced that it has engaged Marcum Bernstein Pinchuk LLP (MBP) as its independent Registered Public Accountant.

CN34262LOGO  NQ Mobile Inc
NQ Mobile Inc

The Company’s Audit Committee has dismissed PricewaterhouseCoopers Zhong Tian LLP (PwC) as its Independent Auditor.  Effective immediately, the Company’s Audit Committee has engaged MBP as its new Independent Auditor with respect to the fiscal year 2013 and subsequent periods.

Following consultation with PwC, NQ Mobile Inc (NYSE:NQ)’s Audit Committee confirms that there is no disagreement between the Company and PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

PwC advised the Company and the Audit Committee that the observations referred to in the Company’s press release reporting on the Special Committee’s Independent Investigation dated June 4, 2014 regarding questions related to electronic data collected by the Investigation Team would require it to expand the scope of its work and, if investigated further, may cause it to be unwilling to rely on management representations in connection with its audit work.

The Audit Committee has carefully considered the additional procedures proposed by PwC.  The Audit Committee notes that PwC informed the Company and Audit Committee that as part of those procedures it would seek among other things information that is not in the possession, custody or control of the Company.  For example, PwC has requested that the Company provide PwC with access to multiple third parties’ original bank statements and financial records.

Furthermore, PwC has advised the Company and the Audit Committee that, depending upon what PwC learns from the procedures performed pursuant to its expanded audit scope, there may be other or additional information that it would need.  The Audit Committee has concluded that PwC’s proposed procedures may create risk for the Company with respect to the Company’s obligation to file its Form 20-F for the year 2013.

Collectively, MBP and Marcum LLP are, a top 10 SEC practice accounting firm in the US and are a registered PCAOB member firm. The Audit Committee has full confidence in their ability to conduct their work independently, diligently, and expeditiously.

In addition to the Audit Committee’s engagement with MBP, it has also retained the services of DLA Piper US LLP to advise the Audit Committee in fulfilling its duties.

The Company remains fully confident in all of its previously reported financials and filings as to their accuracy and does not expect any material changes.

UPDATE: 10:21 AM EST 7/18/2014: Muddy Waters sent the following statement to ValueWalk

PwC’s refusal to issue an audit opinion results from the fact NQ is a fraud. By not issuing any opinion, PwC effected a backdoor resignation that attempts to save face for its client, NQ

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